Sao Paulo: Prosperity, Poverty and Corruption

By Stephen Buckley, Washington Post, Tuesday 4 July
2000; A13

SAO PAULO, Brazil—Its mayor is paralyzed by a corruption
scandal. Nearly half its people live without public services such as a
sewage treatment system. It's bowed under $5.3 billion of
debt. And some areas are shattered by homicide rates comparable to war
zones.

That's on top of the usual fare: an irksome water crisis,
unrelenting traffic and road troubles, and smothering pollution.

Sao Paulo, Brazil's richest city and the world's third most
populous metropolitan area, is in the grip of one of the worst
political and social crises in recent history. Despite being one of
Latin America's premier financial and industrial centers, Sao
Paulo's seemingly intractable social ills and political
mismanagement threaten to stunt the economic progress that the
city—and by extension, Brazil—has made in recent decades.

The city has emerged as perhaps the most grim example of what happens
when developing countries—including economic powers such as India and
South Africa—are unable to maintain a critical balance between
economic growth and social development. Now that lack of balance
threatens to strangle arguably the most important goal such countries
have embraced over the past decade: the reduction of poverty.

The World Bank warned earlier this year that if developing nations do
not pursue both economic progress and social development, what it
calls absolute poverty could grow by as much as 6 percent by
2008. That translates into millions of people tumbling back into lives
in which they earn less than $1 a day.

What is at stake in a country such as India, for example, is that
you'll see at least two countries, said Eduardo Doryan, vice
president of human development for the World Bank, one where most
people are on a boat heading back to the 19th century and another
where the boat is heading to the 21st century.

The same might be said of Sao Paulo, a smog-choked city built on sugar
and coffee that became the core of a metropolitan area of nearly 17
million people. Residents of the city and its suburbs, in southeastern
Brazil, make up half the population of Sao Paulo state and 10 percent
of the country's 170 million people.

In recent years, Sao Paulo has become known for its accomplished
symphony, world-class restaurants and importance in Brazil's $1
trillion economy. It is also a place where 1 million people are
without jobs, where public school classrooms are crammed with 50,
sometimes 60 students, and where patients spill into hospital
corridors when there are not enough beds.

Millions of its residents live in two- and three-room shacks. Forty
percent live without a sewage treatment system. The homicide rate is
66 deaths per 100,000, among the highest in the world. And in at least
one poor community, the rate has vaulted to 123 slayings per 100,000
residents, which analysts say is reminiscent of a war zone.

Things are just horrible, said Judith Ramos, 36, a Sao Paulo
native. It's a city without any management. So many people
don't have public services. Traffic's awful. The streets are
falling apart. The killings don't seem to stop. I mean, I've
never heard people as pessimistic about life here as they are
today.

Every third day, Ramos, the general manager of a small publishing
outfit, takes a shower with a mug. That's because throughout the
city, 3.4 million people go two days with water, one day without,
because of a drought that has nearly parched the reservoirs. Sao Paulo
state officials admit that more aggressive long-term water
conservation may have averted, or at least eased, the crisis.

Residents have come to expect the water shortages—which, for a
variety of reasons, have occurred roughly every two years in recent
times—but the inconvenience still leaves many livid. Can you
imagine what a horrible thing it is to have to dip a mug into a bucket
to take a shower a few times a week? Ramos said. And we call
ourselves a developed city?

At the center of Sao Paulo's trauma is Mayor Celso
Pitta. Allegations of corruption have twice bounced the
Cambridge-educated conservative from office this year. On both
occasions, he won court appeals that returned him to office.

The charismatic populist insists that accusations of
influence-peddling and bribe-taking have dented neither his popularity
nor his effectiveness. He said that he has no plans to leave office
before his term ends in December.

It would be much easier for me to retire, to go quietly, Pitta
said in an interview last week. But I'm going to stay to prove
that I am right, that I am doing a good job, that I am honest.

Pitta, who has accused his critics of racism, said that as the
city's first black mayor, he would feel a special shame if he left
office early.

Yet his troubles—and those of other allegedly corrupt
politicians—clearly have buckled an already-bitter
populace. Don't just protect yourselves from the thieves
you've elected to office, reads a billboard advertising
armored cars, the latest security craze here.

Basically, we're now a city [of millions] of people, without an
administration, without a mayor, said social activist Jose Marcelo
Zacchi. People see themselves as hostages of corruption.

Pitta's administration has spent more on social services than
recent mayors and has refinanced the city's crushing debt
load. But he admits that he has failed to close the gap between the
city's haves and have-nots, saying that he would need five
times more than his $4.2 billion annual budget to make real
improvements.

Pitta's critics concede that many quarters share the blame for Sao
Paulo's afflictions. A congressional investigation this year, for
example, found that between 1995 and 1998, Sao Paulo state officials
shunned a law requiring that at least 30 percent of the state budget
go to education—resulting in the loss of $6.4 billion dollars to
public secondary schools in its cities.

The World Bank recently urged developing countries to invest more in
areas such as education and health care, even as they continue to
broaden and bolster their economies.

Doryan of the World Bank said that in Latin America, leaders have only
recently grasped the importance of a two-pronged approach to attacking
poverty. If leaders had spent more money on social development, he
said, perhaps Latin America would not be struggling today with the
world's most skewed income distribution.

The United Nations reported last week that Brazil had made important
progress in education, but nearly 10 percent of the population cannot
read. Earlier this month, it reported that Brazil stands 125th in the
world in health care, prompting furious federal officials, including
President Fernando Henrique Cardoso, to protest the ranking.

Meanwhile, Sao Paulo's corruption and social problems have created
a desperate population. Residents may not be equipped with the
statistics and theories of World Bank officials, but they have a
visceral sense of urgency about their city's state of affairs.

If we don't do more about development, then we're just
going to see more turmoil, more violence. Things will keep falling
apart, Ramos, the publishing executive, said. We need to figure
out how to help people live in dignity.